My impression is that Web Applications are more powerful and integrate better with databases, and that Web Sites are rather static, although I could be wrong.
That's definitely not true. You can build the exact same sites using the Web Site Project template as using the Web Application Project. The difference revolves more around how and when code is compiled, team development, how it integrates with TFS and other source control systems and whether or not you need solution files. For a description of the two, take a look here: http://www.compiledthoughts.com/2008...n-project.html
I chose the Web Site Project as it's convenient for people new to ASP.NET. Because a WSP is simply a folder on disk, it's easy to get started or open one of the existing sites from chapters that come with the book.
Rest assured: *everything* you learn in the book (except for one or two exceptions) can be used in a WAP as well.
With that, how do I identify which template to use?
It depends on what you want to do. The templates serve only as a starting point. Based on the article above, chose between a WSP and a WAP. Then if you want to start from scratch, choose the empty web site project. Otherwise, chose the ASP.NET Web Site template
Since templates are just a starting point, you can go from an empty web site to an ASP.NET Web Site or vice versa, simply by adding or removing files to your project / site.
In case you want to go from a WSP to a WAP, take a look here: http://webproject.scottgu.com/CSharp...igration2.aspx
This targets an older version of VS, but the principles remain.